House Study Bill 110 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) A BILL FOR An Act excluding certain wagers from the definition of adjusted 1 gross receipts for purposes of the wagering tax on gambling 2 games, providing for a wagering tax credit, and including 3 effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1391YC (3) 86 ec/nh

H.F. _____ Section 1. Section 99F.1, Code 2015, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 19A. “Promotional play” means wagers 3 conducted with tokens, chips, electronic credits, or other 4 forms of cashless wagering provided by the licensee without an 5 exchange of money as described in section 99F.9, subsection 3. 6 NEW SUBSECTION . 22. “Taxable gross receipts” means the 7 adjusted gross receipts less the total sums wagered through 8 promotional play. 9 Sec. 2. Section 99F.4A, subsection 6, Code 2015, is amended 10 to read as follows: 11 6. The adjusted taxable gross receipts received from 12 gambling games shall be taxed at the same rates and the 13 proceeds distributed in the same manner as provided in section 14 99F.11 . 15 Sec. 3. Section 99F.11, subsection 1, Code 2015, is amended 16 to read as follows: 17 1. A tax is imposed on the adjusted taxable gross receipts 18 received each fiscal year from gambling games authorized under 19 this chapter at the rate of five percent on the first one 20 million dollars of adjusted taxable gross receipts and at the 21 rate of ten percent on the next two million dollars of adjusted 22 taxable gross receipts. 23 Sec. 4. Section 99F.11, subsection 2, unnumbered paragraph 24 1, Code 2015, is amended to read as follows: 25 The tax rate imposed each fiscal year on any amount of 26 adjusted taxable gross receipts over three million dollars 27 shall be as follows: 28 Sec. 5. Section 99F.11, subsection 2, paragraph b, 29 subparagraph (2), Code 2015, is amended to read as follows: 30 (2) If the licensee of the racetrack enclosure has been 31 issued a table games license during the fiscal year or prior 32 fiscal year and the adjusted gross receipts from gambling games 33 of the licensee in the prior fiscal year were one hundred 34 million dollars or more, twenty-two percent on adjusted taxable 35 -1- LSB 1391YC (3) 86 ec/nh 1/ 5

H.F. _____ gross receipts received prior to the operational date and 1 twenty-four percent on adjusted taxable gross receipts received 2 on or after the operational date. For purposes of this 3 subparagraph, the operational date is the date the commission 4 determines table games became operational at the racetrack 5 enclosure. 6 Sec. 6. Section 99F.11, subsection 3, paragraphs a, b, and 7 c, Code 2015, are amended to read as follows: 8 a. If the gambling excursion originated at a dock located 9 in a city, one-half of one percent of the adjusted taxable 10 gross receipts shall be remitted to the treasurer of the city 11 in which the dock is located and shall be deposited in the 12 general fund of the city. Another one-half of one percent of 13 the adjusted taxable gross receipts shall be remitted to the 14 treasurer of the county in which the dock is located and shall 15 be deposited in the general fund of the county. 16 b. If the gambling excursion originated at a dock located 17 in a part of the county outside a city, one-half of one percent 18 of the adjusted taxable gross receipts shall be remitted to 19 the treasurer of the county in which the dock is located and 20 shall be deposited in the general fund of the county. Another 21 one-half of one percent of the adjusted taxable gross receipts 22 shall be remitted to the treasurer of the Iowa city nearest to 23 where the dock is located and shall be deposited in the general 24 fund of the city. 25 c. Eight-tenths of one percent of the adjusted taxable gross 26 receipts tax shall be deposited in the county endowment fund 27 created in section 15E.311 . 28 Sec. 7. Section 99F.11, subsection 3, paragraph d, 29 unnumbered paragraph 1, Code 2015, is amended to read as 30 follows: 31 Two-tenths of one percent of the adjusted taxable gross 32 receipts tax shall be allocated each fiscal year as follows: 33 Sec. 8. Section 99F.11, subsection 3, paragraph e, Code 34 2015, is amended to read as follows: 35 -2- LSB 1391YC (3) 86 ec/nh 2/ 5

H.F. _____ e. The remaining amount of the adjusted taxable gross 1 receipts tax shall be credited as provided in section 8.57, 2 subsection 5 . 3 Sec. 9. GAMBLING GAMES WAGERING TAX CREDIT —— PROMOTIONAL 4 PLAY. 5 1. For the fiscal years beginning July 1, 2015, and July 1, 6 2016, each licensee subject to the wagering tax as provided in 7 section 99F.11 shall report to the racing and gaming commission 8 by the end of each fiscal year an amount representing the total 9 sums wagered through promotional play, as defined in section 10 99F.1, as amended by this Act, for that fiscal year at the 11 licensed premises of the licensee multiplied by the tax rate 12 applicable to the licensee as determined in section 99F.11, 13 subsection 2, Code 2015. The racing and gaming commission 14 shall aggregate the amounts reported for each fiscal year 15 and determine for each licensee the proportion, stated as a 16 percentage, that the amount reported by that licensee for that 17 fiscal year bears to the total amount reported by all licenses 18 for that fiscal year. 19 2. For the fiscal year beginning July 1, 2016, each licensee 20 subject to the wagering tax as provided in section 99F.11, Code 21 2015, shall receive a wagering tax credit, as determined by 22 the racing and gaming commission pursuant to the requirements 23 of this subsection, on the wagering taxes imposed on that 24 licensee as calculated pursuant to section 99F.11, Code 2015. 25 The wagering tax credit for each licensee shall be an amount 26 equal to the percentage for each licensee, as calculated by 27 the racing and gaming commission pursuant to subsection 1 for 28 the fiscal year beginning July 1, 2015, multiplied by the tax 29 credit amount, if positive. For purposes of this subsection, 30 “tax credit amount” means an amount equal to the total 31 aggregate amount determined by the racing and gaming commission 32 under subsection 1 for the fiscal year beginning July 1, 2015, 33 reduced by twenty-three million three hundred twenty thousand 34 dollars. 35 -3- LSB 1391YC (3) 86 ec/nh 3/ 5

H.F. _____ 3. For the fiscal year beginning July 1, 2017, each licensee 1 subject to the wagering tax as provided in section 99F.11, as 2 amended by this Act, shall receive a wagering tax credit, as 3 determined by the racing and gaming commission pursuant to the 4 requirements of this subsection, on the wagering taxes imposed 5 on that licensee as calculated pursuant to section 99F.11, 6 as amended by this Act. The wagering tax credit for each 7 licensee shall be an amount equal to the percentage for each 8 licensee, as calculated by the racing and gaming commission 9 pursuant to subsection 1 for the fiscal year beginning July 10 1, 2016, multiplied by the tax credit amount, if positive. 11 For purposes of this subsection, “tax credit amount” means an 12 amount equal to the total aggregate amount determined by the 13 racing and gaming commission under subsection 1 for the fiscal 14 year beginning July 1, 2016, reduced by the minimum tax amount. 15 For purposes of this subsection, “minimum tax amount” means the 16 greater of eleven million six hundred sixty thousand dollars or 17 an amount equal to twenty-three million three hundred twenty 18 thousand dollars reduced by the difference, if positive, 19 between the total adjusted gross receipts tax for all licensees 20 for the fiscal year beginning July 1, 2016, and the total 21 adjusted gross receipts tax for all licensees for the fiscal 22 year beginning July 1, 2014. 23 Sec. 10. EFFECTIVE DATE. The following provision or 24 provisions of this Act take effect July 1, 2017: 25 1. The section of this Act amending section 99F.4A. 26 2. The sections of this Act amending section 99F.11. 27 EXPLANATION 28 The inclusion of this explanation does not constitute agreement with 29 the explanation’s substance by the members of the general assembly. 30 This bill concerns the method of calculating the wagering 31 tax on gambling game receipts as provided in Code section 32 99F.11. 33 Code section 99F.1 is amended by adding two new definitions. 34 “Promotional play” is defined as wagers conducted with 35 -4- LSB 1391YC (3) 86 ec/nh 4/ 5

H.F. _____ tokens, chips, electronic credits, or other forms of cashless 1 wagering provided by the licensee without an exchange of money. 2 “Taxable gross receipts” is defined as adjusted gross receipts 3 less the total sums wagered through promotional play. 4 Code section 99F.11, providing for the wagering tax, is 5 amended to provide that the wagering tax is calculated on the 6 taxable gross receipts of a gambling game licensee instead 7 of the adjusted gross receipts. The bill provides that this 8 change takes effect July 1, 2017. 9 The bill also provides a gambling games wagering tax credit 10 for licensees for the fiscal years beginning July 1, 2016, 11 and July 1, 2017. The bill directs the racing and gaming 12 commission to determine, for the fiscal years beginning July 1, 13 2015, and July 1, 2016, the total sums wagered each fiscal year 14 through promotional play, as defined by the bill, for purposes 15 of calculating the wagering tax credit. For the fiscal year 16 beginning July 1, 2016, each gambling games licensee receives a 17 wagering tax credit for its pro rata share of the amount that 18 wagering taxes on promotional play exceeded $23.32 million for 19 the fiscal year beginning July 1, 2015. For the fiscal year 20 beginning July 1, 2017, each gambling games licensee receives 21 a wagering tax credit for its pro rata share of the amount 22 that wagering taxes on promotional play exceed the greater 23 of $23.32 million less the difference between the amount of 24 adjusted gross receipts taxes the state collects in the fiscal 25 year beginning July 1, 2016, relative to the amount the state 26 collected in the fiscal year beginning July 1, 2014; or $11.66 27 million. 28 -5- LSB 1391YC (3) 86 ec/nh 5/ 5